Trustee Irving H. Picard said in court papers filed in Manhattan today that Ruth Madoff lived a lavish lifestyle in which she financed trips, luxury homes and kept up her extravagant lifestyle with the money her husband was bilking from customers of his investment firm.

"For decades, Mrs. Madoff lived a life of splendor using the money of (her husband's) customers," Picard said in court papers. "Regardless of whether or not Mrs. Madoff knew of the fraud her husband perpetrated ... she received tens of million of dollars."

Bernard Madoff & His Victims

He said she had no good-faith basis to believe she was entitled to the money, whether she knew of the fraud or not.

Madoff has said in the past she had no idea her husband was involved in a $65 billion Ponzi scheme. A few weeks ago, she moved out of a $7 million Manhattan penthouse where she and her husband had lived during their 49-year marriage.

Ruth Madoff's lawyer, Peter Chavkin, said in a statement that Picard's action was "wrong as a matter of law and fairness.''

He said the lawsuit was "particularly perplexing and totally unjustified'' because his client has already forfeited to the federal prosecutor's office nearly all of the assets described in the lawsuit.

"At the same time, after a thorough and comprehensive investigation, the U.S. Attorney's office determined that Ruth Madoff was entitled to keep property of $2.5 million because that property could not be linked to the fraud,'' Chavkin said.

The 71-year-old Bernard Madoff is serving a 150-year sentence after admitting he squandered tens of billions of dollars in investors' money. His wife has not been charged with any crime.